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Answer: undervalued.
**Calculation:** - Actual P/B ratio = Stock price / Book value per share = $50 / $25 = 2.0 - Peer group median P/B = 2.5 - Since the company's actual P/B (2.0) is lower than the peer group median (2.5), the company appears **undervalued** relative to its peers. **Reasoning:** In the method of comparables, if a company's actual multiple is lower than the justified multiple (peer group median), it suggests the stock may be undervalued relative to comparable companies.
Author: LeetQuiz Editorial Team
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$50$25$10The justified multiple based on the method of comparables indicates that the company is:
A
undervalued.
B
fairly valued.
C
overvalued.
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